This post is part of the What Makes a Stock Great for Investing? series.
Be sure to check out Part 1: A Wide Moat and Part 2: Sales Over Expenses
There are a several details I look for in a stock for long-term investing. Dividends is one of them. So what are dividends and why are they so important?
In this video, I explain what dividends are and why I look for them in long-term investments.
Video Transcript
What Makes a Stock Great for Investing?
Part 3: Dividends
There are a several details I look for in a stock for long-term investing. Dividends is one of them. So what are dividends and why are they so important?
There are two types of dividends: stock dividends and cash dividends. In this post, I will be referring to cash dividends.
When a company or corporation makes a profit, they can either take the profit and reinvest it into the company or take a portion of that profit and distribute it to its investors, which is us!
By issuing a dividend, I feel the company is showing their appreciation to me as an investor. They are giving me a small portion of my money back in the short term for investing in them long term.
You have to own the stock before a certain date in order to receive the dividend for that quarter. This is called the ex-dividend date.
If a company doesn't issue a dividend, it's not necessarily a deal breaker for me. It's just one feature I prefer the company offer as it helps build my investment over time. If the company is doing great otherwise (a wide moat and sales greater than expenses), I may still invest.
If a dividend is important to you, make sure you are looking for that when searching for stocks for investing purposes.
Qs Asked and Answered
CCCU distributes dividends to their customers, we love banking with them for many reasons, but that is definitely added bonus!
CCCU is a credit union and they distribute dividends and for her that's a plus. That's exactly what I mean. It's an added bonus. You're already investing in the company, they're profitable and their stock price continues to go up. In turn, they show me their appreciation through dividends.
Stocks, Links and Resources Mentioned
Join the Conversation
Do you know a company that offers a cash dividend? Let me know in the comments!
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